Marc Andreessen Uses Carl Icahn's Own Words Against Him In Latest Attack On Activist Investor

Activist investor Carl Icahn and eBay board member Marc
Andreessen have traded
open letters for what feels like forever now.

Today, Andreessen is
out with a response to Icahn's letter from yesterday, which
again accuses him of a conflict of interest.

Icahn has argued Andreessen's conflicts on eBay are "clear
and insurmountable" because Andreessen cost eBay shareholders
a
hefty
$4 billion payout when his company bought a portion of
Skype instead of letting it IPO.

Essentially, Icahn argues that Andreessen can't be a good board
member because as an investor he has dual loyalties.

Andreessen cites comments from Icahn from back in 2011 that he
claims contradict Icahn's stance today on what exactly
constitutes a conflict of interest. He uses Icahn's own words
against him to show that Icahn once forcefully defended the
inherent conflicts of interests that arise when investors are on
the boards of public companies.

Here's one Icahn quote that Andreessen cites (from 2011)

Potential conflicts of interest are by no means rare, though, and
seem to be especially frequent among technology and biotech
companies. Each of those fields tends to be intensely technical
by nature, and corporations involved in those areas often find
that it is useful to have a board of directors with significant
experience in those areas, which means that at least minor
conflicts of interest often arise. In addition, these firms are
frequently funded by venture capital; the venture capital firms
invariably put their own directors on the boards; and those
directors or their firms often have direct and material conflicts
of interest because they usually fund/control potentially
competitive corporations as well.” (1)

According to Carl Icahn, venture capital board members are fine
for Carl Icahn in 2011 but not fine for eBay in 2014.

When Carl Icahn’s board nominees’ business activities created
conflicts, Mr. Icahn has argued forcefully that a board should
and could manage those conflicts if his nominees were elected by
shareholders.

Contrary to Mr. Icahn’s theory today – that a venture capital
director cannot be “trusted to objectively advise” a board if he
or she has potential conflicts – Mr. Icahn, in 2011, provided the
following information to shareholders of another company, Forest
Laboratories, in response to questions raised about whether his
director nominees were conflicted:

In defense of his own nominees: “Potential conflicts of interest
are by no means rare, though, and seem to be especially frequent
among technology and biotech companies. Each of those fields
tends to be intensely technical by nature, and corporations
involved in those areas often find that it is useful to have a
board of directors with significant experience in those areas,
which means that at least minor conflicts of interest often
arise. In addition, these firms are frequently funded by venture
capital; the venture capital firms invariably put their own
directors on the boards; and those directors or their firms often
have direct and material conflicts of interest because they
usually fund/control potentially competitive corporations as
well.” (1)

On his own nominees’ potential conflicts: “The biopharma industry
has standard practices on how to deal with potential director
conflicts regarding business development opportunities. Directors
simply recuse themselves in the event of a vote or decision that
may present a conflict. The benefit of drawing upon knowledge and
experience from shared, collective service on multiple biopharma
boards heavily outweighs the potential conflict in these rare
situations which are easily managed through recusal.” (2)

Mr. Icahn also approved walling off directors as a sufficient way
to address a conflict: “A general set of ‘best practices’ has
evolved for dealing with [conflicts of interest],” and can “be
dealt with by the methods used by thousands of other public and
private corporations” and handled “with professionalism and very
little fuss and bother… Given the ubiquity of such conflicts, as
well as similar situations in which directors or senior
management might have conflicting interests, a general set of
‘best practices’ has evolved for dealing with them. The first,
and perhaps most important measure is that the existence of the
potential conflict needs to be disclosed by the director to the
board. Here, of course, that has already been done. Second, the
directors should determine, on a case by case basis, whether they
should wall themselves off from conflicted directors when making
a decision with respect to a conflicted transaction.” (1)

“To the extent these potential conflicts of interest actually
exist, they are routine matters with which corporate boards of
directors normally deal and pose no significant issues.” (1)